Aged Care Costs Explained: Fees, RAD & DAP

Aged care costs explained: how fees, the RAD and the DAP work

Moving a parent into aged care often happens quickly, and the fee letters can be confusing. Here is how the costs fit together, so your family can ask the right questions.

By Shay, founder and financial adviser, FinForce (ASIC Financial Advisers Register 000412776) · Published 28 October 2026 · Reviewed for 2026–27

Start with My Aged Care

The first steps are an assessment through My Aged Care (to confirm the care needed) and an income and assets assessment by Services Australia (to work out what the person pays). Do the means assessment early. Without it, the person can be asked to pay the maximum fees.

The main kinds of cost

A basic daily fee for everyday living costs, which everyone pays.
Means-tested contributions towards care and everyday services, based on income and assets.
Accommodation, unless the person qualifies for government-supported accommodation.
Optional extras the home may offer.

Australia’s new Aged Care Act changed how many of these contributions are worked out for people entering care from 1 November 2025. Rules differ for people who were already in care, so always check the rules that apply to your family.

RAD, DAP or a mix

The room price can be paid as:

a RAD (refundable accommodation deposit): a lump sum, which is generally refunded when the person leaves, less any agreed deductions;
a DAP (daily accommodation payment): like rent, worked out by applying a government-set interest rate to the unpaid amount; or
a combination of both.

Simple example (illustration only)

A room is advertised at $500,000. If the family pays a $200,000 deposit, the remaining $300,000 can be paid as a daily payment. The daily amount is the unpaid balance multiplied by the government rate at the time, divided by 365. Check the current rate on the My Aged Care website before you compare.

What about the family home?

How the home is counted for aged care fees and for the Age Pension can differ, and it can change if a partner still lives there. Selling, renting or keeping the home each has different results. This is one of the most common reasons families seek Age Pension and aged care advice.

Questions to ask the home

What is the room price, and what does each payment option cost per day?
What extra services are offered, and are they optional?
When is the RAD refunded, and what can be deducted?

Want this applied to your situation? Book a no-obligation chat with our team on Edward Street.

Quick answers

What is the difference between a RAD and a DAP?

A RAD is a refundable lump sum paid for the room; a DAP is a daily payment on any unpaid amount. You can usually pay either or a mix.

Do we need a means assessment for aged care?

Yes, in most cases. Without an income and assets assessment from Services Australia the person may be asked to pay the maximum fees.

Is the RAD refunded?

Generally the RAD is refunded when the person leaves care or dies, less any amounts agreed or allowed to be deducted. Check the agreement and current rules.

Sources

General advice warning. This article is general information only and does not take into account your objectives, financial situation or needs. Rules and thresholds change; check the sources above. Past performance is not a reliable indicator of future performance. Consider the relevant PDS and our Financial Services Guide and seek personal advice before acting. FinForce is authorised under Financial Force Pty Ltd AFSL 238337. Shay has been authorised since 18 October 2011.